Traditionally it was necessary to incorporate a certificate in a deed, in order to certify that the transaction was below a certain value in order to obtain the benefit of lower stamp duty rates. Where a transaction together with other transactions together form the series, the rate of duty that applies, depends of the sum of the value of the series or transactions. Most of the requirements for certificates have been removed, in the context of e-stamping. The matter is dealt with, in the context of the e-stamping return.
A series of transactions may arise where a number of assets are sold by a seller to a buyer on the same occasion. Questions may arise as to whether there is a single deal or bargain or whether there are a number of distinct transactions. If there is some interdependence in the transactions, such that one may not complete without the other, there is likely to be a series, so that the rate applicable to their sum, would be charged.
Where collectively their value exceed the relevant threshold, the higher rate will apply as if there was a single transaction..
Where a VAT is chargeable on a transaction, stamp duty does not apply on it.
Gifts / Undervalues
A transfer at undervalue or a gift is stampable at market value, as if it were a conveyance on sale. Formerly such transfers attracted half the normal rate, where the person benefited was within certain categories of relationship to the transferor. This no longer applies, in the context of much reduced rates of stamp duty.
Formerly, a so-called “voluntary” conveyance (gift), a sale at undervalue or a transfers to connected persons required to be adjudicated. This involved submission of documentation to the Revenue including valuations. Since July 2012, adjudication is no longer required. The electronic stamping return requires disclosure of such circumstances and may attract Revenue scrutiny or audit.
Stamp duty taxes the gross value of a transaction. If a property is transferred, subject to a mortgage or other financial charge, stamp duty applies the gross value rather than the value of the equity.
Residential Rates Reform
Prior to December 2010, the rates of stamp duty had ranged from zero to nine percent on residential property and from zero to six percent on non-residential property. There had been significant differences on the basis of charging over the previous 20 years. Numerous exemptions and complications existed.
The 2010 amendments altered and simplified the application of stamp duty. This coincided with a severe depression in the property market. Stamp duty was one of the taxes which performed strongly in the development boom, but collapsed in its aftermath.
The general rates of stamp duty were significantly reduced in December 2010. In the case of residential property, the rate is one percent for transactions below €1,000,000 in price or value. The excess is over €1,000,000 is taxed at two percent. This drastically reduced rates and changed the previous principle whereby once the rate band was crossed, the entire price is stampable.
Prior to December 2011 The rates applicable to commercial property was six percent over €80,000. In this context, commercial property refer to all non-residential property. The non-residential rate was reduced to 2% subsequently increased to 6%. Finance Act 2019 amended the rate of stamp duty applying to conveyances or transfers and lease premiums of non-residential property from 6% to 7 1/2%.
The 6% rate continued to apply for purchasers or lessees with binding contracts in place before 9 October 2019 (the executed instrument must contain a statement to this effect) and where the sale or lease is executed before 1 January 2020. The furnishing of an incorrect statement is to be regarded as a penalty offence for the purposes of section 1078 of the Taxes Consolidation Act 1997.
Finance Act 2019 amended the rate of stamp duty applying to conveyances or transfers and lease premiums of non-residential property from 6% to 7.5%. It amended (the residential development refund scheme) to take account of the rate of 7.5%. The formula used to calculate the refund due will be 11/15 (previously 2/3 of 6%) of the stamp paid.
Finance Act 2020 amends section 83D of the Stamp Duties Consolidation Act 1999 which provides for a partial refund of stamp duty where land is developed for residential purposes. It extends the period allowed for the completion of construction from two years, i.e. 24 months, to 30 months.It extends the relief for a further year to construction operations commenced before 31 December 2022.
Finance Act 2022 provides for a refund of the difference between the stamp duty rate of 2 per cent on transfers of non-residential property that applied prior to 11 October 2017 and subsequent higher rates (currently 7.5 per cent) where land is subsequently developed for residential purposes.
This extends the availability of relief by extending the final date by which construction must be commenced to qualify for a refund to 31 December 2025.
Finance Act 2022 inserts two new into the Stamp Duties Consolidation Act (SDCA) 1999 which provide for refunds of stamp duty in relation to residential property.
Finance Act 2022 provides for a full repayment of stamp duty charged at the residential rate of 1 per cent (amounts up to €1 million), 2 per cent (amounts in excess of €1million) or 10 per cent (pursuant to section 31E SDCA 1999). A repayment is made where a residential property is acquired and then sold, within 12 months of acquisition, for the purpose of affordable home arrangements under the Affordable Housing Act 2021.
The conditions are that the residential property must be purchased by a person who enters into a “direct sales agreement” with a local authority in relation to the sale of the residential property to an eligible applicant nominated by a local authority and subsequently sells the property to such an eligible applicant.
Finance Act 2022 provides for a partial repayment of stamp duty charged on the acquisition of residential properties at the higher 10 per cent rate pursuant to section 31E SDCA 1999 where certain conditions are met. This provides for two new partial repayment schemes and amalgamates the new schemes with two existing partial repayment schemes that were formerly provided.
A partial repayment o f stamp duty may be available, if certain conditions are satisfied, in respect of properties that have been:
- let to a housing authority or an approved housing body for social housing purposes, or
- designated as cost rental dwellings under the Affordable Housing Act 2021, or
- registered as designated centres under the Health Act 2007, which provide care in the community for those with special needs, or
- registered as children’s residential centres under the Child Care Act 1991, which provide homes for children in care.
Acquiring 10+ Units
There is a higher stamp duty rate of 10 per cent where more than 9 individual residential units (typically houses) are acquired, whether directly or indirectly, in any 12-month period. This applies where there is an acquisition of a partial interest in a residential unit, and not just a full interest in a residential unit. Where a person acquires a partial interest in a residential unit, that partial interest, expressed as a fraction, is taken into account for the purposes of determining whether the 10- unit threshold has been met.
There is or a refund of the difference between the 10 per cent rate of stamp duty paid and the normal lower residential rate where a residential unit is subsequently leased to a local authority or an approved housing body for the provision of social housing within 24 months of purchase.
There is a disapplication of the 10 per cent rate of stamp duty where a residential unit is leased to certain social housing providers. The qualifying lease must be entered into after a residential unit is acquired. The acquisition of a residential unit with an existing social housing lease does not come within the provision.
Finance Act 2022 excludes acquisitions by home reversion firms pursuant to a home reversion agreement, as defined by the Central Bank Act 1997, from the scope of the special 10 unit+ rate.
Residential v Non-Residential
Residential property is a building or part of a building, which at the date of conveyance or lease, is used or is suitable for use as a dwelling. It includes a partly constructed or adapted dwelling. It may also include dwellings which have not been adapted for residential use, such as derelict property. It includes land which is sold in connection with a construction contract for the construction of a dwelling house or apartment.
It must not be rated for commercial rates. In practice it must be subject to local property tax.
Land up to an acre comprising the curtilage of a dwelling is included. The non-residential rate applies to the remainder.
Building & Sale
There is legislation which seeks to charge stamp duty on the aggregate of the price payable under for a building agreement and a linked contract for the sale f the land. Many new house purchases are structured in this way. Where there is a connection or arrangement involving a sale of land and a building contract for the construction of a dwelling house on it, stamp duty is payable on the is aggregate price payable. There are similar provisions in respect of both freehold and leasehold sales.
The position in respect of related contracts for the development and sale of commercial property differs. It is not subject to the specific anti-avoidance provisions, applicable to residential property. Provided that contracts are not interlinked and the property is not substantially complete, the sale deed is stamped on the price / value of the land plus building works as at the date of the contract / conveyance. Contracts are interlocked where they are they cannot be independently completed. Formerly, it was necessary to include a certificate in every deed to the effect that the sections did or did not apply.
Prior to December 2010, when rates were significantly higher, there existed a number of reliefs, which applied at different times. The position is still relevant in the context of unregistered title conveyancing. Requisitions may be raised on stamping issues on older deeds, which make up proof of title. There are also cases where reliefs may be clawed back, due to cessation of compliance.
Formerly the sale (deed) for a new houses below “grant” size (being the maximum size for which a new house grant was formerly available (125sqm)), was exempt from stamp duty. Later relief was allowed on the sale of new houses not larger than a designated size by way of duty at 25 percent on 25 percent of the rate otherwise applicable.
Former First Time Buyer Reliefs
In April 1998, as part of a series of measures to dampen the property market, stamp duty was introduced for non-owner occupiers. First time buyers who had not owned a dwelling house or apartment before, qualified for favourable rates of stamp duty, for both new and second hand houses.
It was necessary that the buyer had owned no residential property before. The consideration had to be derived from the individual’s own means. The proceeds of unconditional gifts could be used. However, if a third party had acquired an interest by means of his contribution to the purchase, price, this cause relief to be denied
First time buyers qualified for lower rates. Beneficiaries of certain trusts for incapacitated persons and persons who divorced and separated and had left the house without retaining an interest, also qualified for first time buyer rates. The relief was available to a divorced person who purchased a new home, within in a certain period before or after divorce. provided was in connection with the divorce.
Former Owner Occupier Reliefs
Owner occupiers qualified for more favourable rates than those which applied to investors. Owner occupiers are persons who did not derive rental income for the property. Relief was clawed back if the rent was derived from the property within five years. This did not apply to income under the rent a room Scheme. This scheme allowed the receipt of €10,000 per annum or less for renting a room. The income was tax free and did not affect the claw back and owner/occupier status.
Investors received the least favourable treatment. The applicable rates were higher and the bans were narrower.
In 2007 a complete exemption was introduced for first time buyers irrespective of house size. The relief was available to all owner/occupiers. It applied to first time purchasers of dwelling houses or apartments who occupied the property as their principal private residence for at least two years.
Claw back occurred where the property ceased be used as an owner occupier property within three years, save in respect of income under the rent a room scheme. Buyers were obliged to inform Revenue within six months of receipt of rent.
The purchase price must have been provided by the first time buyer. Relief is given in case of an unconditional gift where the donor retained no interest, expressly or by operation of law